Procurement Glossary
Design-to-value: Value-oriented product development in Procurement
November 19, 2025
Design-to-value is a strategic approach to product development that focuses on maximizing customer value at optimal cost from the outset. In Procurement , this methodology Procurement a central role in supplier selection and the joint development of cost-efficient solutions. Read on to find out what design-to-value means, which methods are used, and how you can successfully implement this strategy in your procurement management.
Key Facts
- Focused on achieving the optimal balance between product value and manufacturing costs right from the development phase
- Reduces total costs by an average of 15-25% through early cost optimization
- Requires close cooperation between Procurement, development, and suppliers
- Based on systematic analysis of customer needs and cost drivers
- Enables faster time to market through structured development processes
Contents
Definition: Design-to-Value
Design-to-value refers to a systematic development methodology that aims to design products from the outset in such a way that they offer maximum value for the customer at optimal manufacturing costs.
Core elements of the design-to-value approach
The approach comprises several key components that are interlinked:
- Early definition of value criteria and cost targets
- Continuous evaluation of design alternatives
- Integration of supplier expertise into the development process
- Systematic analysis of functions and their contribution to costs
Design-to-value vs. design-to-cost
While design-to-cost focuses primarily on cost reduction, design-to-value also takes customer benefits into account. This holistic approach leads to more balanced product solutions that are both economical and market-driven.
The importance of design-to-value in Procurement
In procurement management, design-to-value enables strategic supplier integration early on in the development phase. Co-creation with suppliers results in innovative solutions that meet both technical requirements and cost targets.
Methods and procedures
The successful implementation of design-to-value requires structured methods and clear processes that involve all stakeholders.
Value engineering and functional analysis
Systematic evaluation of all product functions in terms of their value contribution and costs. This involves eliminating superfluous features and optimizing value-adding elements. The method identifies areas with the greatest potential for improvement.
Supplier integration in development
Early involvement of strategic suppliers through co-development and joint business plans. This collaboration leverages the expertise of suppliers for cost-optimized design solutions and significantly shortens development times.
Target costing and cost transparency
Definition of target costs based on market prices and desired margins. Detailed cost breakdowns with suppliers result in realistic cost targets that serve as guidelines for development.
Tacto Intelligence
Combines deep procurement knowledge with the most powerful AI agents for strong Procurement.
Key KPIs for design-to-value
Successful design-to-value implementation requires continuous monitoring using meaningful key performance indicators.
cost reduction rate
Measurement of the cost savings achieved compared to the original targets. Typical values range between 15-30% of the total costs. This key figure shows the direct effectiveness of the methods used and serves as a benchmark for future projects.
Time-to-market improvement
Shortening development time through efficient design-to-value processes. Successful implementations reduce time to market by 20-40%. Faster product launches secure competitive advantages and earlier revenue generation.
Supplier Integration Index
Assessment of the quality and intensity of supplier collaboration in development projects. Includes factors such as idea contributions, cost transparency, and willingness to innovate. High scores correlate with better project results and sustainable partnerships.
Risks, dependencies and countermeasures
The implementation of design-to-value poses specific challenges that must be addressed proactively.
Complexity of value definition
Different stakeholders have different values, which can lead to conflicts. Unclear value criteria complicate decision-making processes and can result in suboptimal solutions. Regular coordination meetings and clear evaluation matrices create transparency.
Supplier dependencies
Intensive cooperation with a small number of key suppliers increases the risk of failures or quality problems. Strategic partnerships require careful selection and continuous monitoring of supplier performance.
Time pressure and compromises on quality
Focusing on cost optimization can lead to hasty decisions that result in higher costs in the long term. Structured idea evaluation and sufficient testing phases are essential for sustainable solutions.
.avif)
Practical example
An automotive manufacturer implemented design-to-value in the development of a new electric motor. Through early integration of three key suppliers, alternative materials and manufacturing processes were evaluated. Systematic functional analysis identified redundant components while optimizing performance. The result: a 22% cost reduction with improved efficiency and a 6-month reduction in development time.
- Joint workshops on value definition with all stakeholders
- Weekly cost transparency meetings with suppliers
- Continuous prototype testing and design adjustments
Current developments and effects
Design-to-value is constantly evolving and is shaped by new technologies and market requirements.
Digitalization and AI support
Artificial intelligence is revolutionizing design-to-value through automated cost analysis and design optimization. Machine learning algorithms identify cost drivers and suggest alternative solutions. These technologies accelerate decision-making processes and improve the accuracy of cost estimates.
Sustainability integration
Environmental aspects are increasingly being taken into account as a value factor. Lifecycle costs, recyclability, and carbon footprint are included in the assessment. Supplier innovation is increasingly focusing on sustainable materials and production processes.
Agile development methods
Integration of design sprints and iterative approaches into design-to-value processes. Rapid prototyping and continuous feedback enable flexible adaptation to changing market requirements and cost specifications.
Conclusion
Design-to-value is establishing itself as an indispensable methodology for competitive product development in modern Procurement. The systematic integration of cost awareness and customer benefits early on in the development phase enables sustainable competitive advantages. However, successful implementation requires structured processes, qualified supplier partnerships, and continuous monitoring of relevant key performance indicators. Companies that consistently implement design-to-value benefit from reduced costs, shorter development times, and more innovative product solutions.
FAQ
What distinguishes design-to-value from traditional cost optimization?
Design-to-value takes both costs and customer benefits into account during the development phase, whereas traditional approaches often only reduce costs retrospectively. This leads to more balanced solutions that better meet market requirements and are more economical in the long term.
How early should suppliers be involved in design-to-value projects?
Ideally, this should happen during the concept phase, but at the latest during the detailed development phase. Early integration enables maximum cost savings and innovation potential. The later the integration takes place, the fewer opportunities there are for optimization and cost savings.
What requirements must suppliers meet for design-to-value?
Suppliers need technical expertise, cost transparency, and a willingness to innovate. Stable quality systems and a long-term partnership orientation are also required. Regular assessments and development programs ensure that partners maintain their qualifications.
How can the success of design-to-value projects be measured?
Success is measured by cost reduction, quality improvement, shortened development times, and customer satisfaction. Key KPIs include total cost savings, time-to-market improvement, and supplier integration index. Regular reviews and benchmarking ensure continuous improvement.
.png)
.png)
.png)
